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Nature of Accounting
Objective 4.01 Part 2
| Term | Definition |
|---|---|
| Accountant | An individual who has has specialized training in accounting procedures. |
| Accounting | The process of keeping financial records. |
| Accounting Cycle | A process of series of steps that businesses complete to maintain their financial records effectively. |
| Accounting Standards | Rules that accountants must follow when preparing financial statements. |
| Accounting System | The methos and procedures used in consistently handling the business's financial information. |
| Acquisition of Funds | Finance activity involving making decisions about financing. |
| Administration of Assets | Finance activity involving making decisions about a firm's investments. |
| Accrual Accounting Method | A method of accounting that records transactions at the time they occur even if no money changes hands at the time. |
| Assets | Anything of value that a business owns. |
| Balance Sheet | A financial statement that captures the financial condition of the business at that particular moment. |
| Bookkeeping | The steps of the accounting cycle that involve recording each business transaction; the process of analyzing financial transactions, journaling transactions, posting to ledgers, and balancing the books. |
| Cash | Currency and coins. |
| Cash Accounting Method | An accounting method in which income and expenditures are recorded at the time the money changes hands. |
| Cash Flow Statement | A financial summary with estimates as to when, where, and how much money will flow into and out of a business. |
| Capital Investment Decisions | Decisions that determine which projects a business will invest in, how the investment(s) will be financed, and whether to pay dividends to shareholders. |
| Credit | The arrangement by which businesses or individuals can purchase now and pay later. |
| Expenditures | The monies that a business spends; also called expenses. |
| Expenses | The monies that a business spends; also called expenditures. |
| Finance | In business, the function that involves all money and money management matters. |
| Financial Accounting | A type of accounting that involves preparing and reporting financial data to external users who are not directly involved in business operations. |
| Financial Statement | A summary of accounting information. |
| Income | Money received by a business or an individual from outside sources. |
| Income Statement | A financial summary that shows how much money the business has made or lost; also called the profit-and-loss statement. |
| Investors | Those who invest their funds in a business; may be owners or stockholders. |
| Journal | A special book or computer program in which a business's transactions are recorded in the order in which they occur. |
| Ledger | The accounting record for a specific department or area of the business. |
| Liabilities | Debts that the business owes. |
| Managerial Accounting | A type of accounting that involves preparing and reporting financial data to internal users, usually manager, who need financial information to control day-to-day operations and to make financial decisions and plans affecting the business. |
Created by:
Alyson L.
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